Thursday, February 19, 2009

Supreme Court: odour unit supplier engaged in misleading conduct

A $675,000 odour control unit installed at a Peerless Holdings Pty Ltd rendering plant was intended to showcase the technology but instead led to a Vic Supreme Court finding the supplier should pay Peerless at least $1,536,480 in damages after misleading and deceptive conduct. Justice Hartley Hansen this month found equipment supplier Environmental Systems Pty Ltd had breached the terms of its contract with Peerless Holdings Pty Ltd and engaged in misleading and deceptive conduct. The judge held Peerless was entitled to additional damages for “the lost benefit” it could have derived from buying an alternative type of afterburner, with a hearing slated for June 23 on this. Peerless had opted to replace the existing afterburner at its large Laverton North rendering plant in part because the old afterburner was struggling to handle increased capacity. The company opted for the regenerative thermal oxidiser (RTO) proposed by Environmental Systems to control odours because it expected the RTO would have a larger capacity, lower NOx emissions and far lower energy costs.

Commissioning of the RTO began in Oct 1998 but by June 2001 Peerless had abandoned efforts to get it working, at one point bemoaning that the EPA “are living here” because of odour complaints. It launched legal action against Environmental Systems later the same year and now controls odour using a biofilter and the old afterburner. Both Peerless and Environmental Systems agreed the RTO had failed because fats stuck to part of the unit, bypassed the combustion chamber and were then stripped off by warm exhaust gases and discharged to the atmosphere. However, Environmental Systems submitted Peerless had breached its responsibility to ensure the airstream entering the RTO was essentially free of fats. It also argued Peerless had not adequately advised it of the presence of fats in the airstream entering the RTO. But Justice Hansen was not convinced. “In my view, it is clear that [Environmental Systems] representations as to the suitability of the RTO for the plaintiff’s operation and as to its capacity to destroy odour amounted to misleading and deceptive conduct,” he ruled.

The judge did not accept an Environmental Systems’ claim that Peerless had refused its request for a thorough analysis of the airstream. “It was always open to the defendant to require further information,” the judge said. Environmental Systems “knew all that it needed to know to determine whether to offer an RTO and, if so, on what terms or whether, before making an offer, it should require further information to better assess the suitability of the application,” he said. “It did not have to offer an RTO but I find it did so partly under a desire to achieve the first application of the RTO in Australia.” Environmental Systems is a subsidiary of The Environmental Group Ltd, which declined to comment.


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